Mid-Day Outlook: May 8th, 2017

eOptionDaily Market Report

U.S. equities are trading down slightly, paring recent record gains as most of the good news over the weekend (French presidential election outcome – as Macron defeats Le Pen) was expected and likely baked into market prices. Most of the S&P 500 sectors are lower, outside of early strength in consumer discretionary and energy shares, while bonds slide and yields climb. Back to Europe, Macron beat anti-euro candidate Marine Le Pen in Sunday’s French election, receiving 66% of expressed votes. Most European stock gauges declined on Monday as investors had expected the results, sending the euro lower after an initial pop to 6-month highs on the results. Also recall the S&P 500 and NASDAQ are both coming off record highs last week – 52-week highs for Dow components AAPL, BA, CSCO and MCD today as well as stock momentum still remains clearly to the upside. This week marks the last heavy earnings results of the quarter, highlighted by retail and technology.

Treasuries, Currencies and Commodities

  • In currency markets, the euro weakened after jumping above 1.10 overnight (1.1023) against the dollar, as much of the positive French presidential election results were priced into markets; Bitcoin traded all-time highs of 1669 earlier, still up over 5% at 1610 last; dollar in general rising vs. most currencies on further positive comments by Fed members on economy (markets currently pricing in 1 100% chance for fed rate hike in June according to futures data)
  • Precious metals pare earlier gains, but trading higher after gold declined over 3% last week on rate hike expectations and as investors rotated out of defensive assets and into stocks; Gold prices trade higher by a few dollar to $1230 an ounce
  • Energy futures bounce off earlier lows (WTI crude traded sub-$46 earlier to low of $45.83 per barrel); crude fell over 6% last week on increasing oversupply fears – despite hopes OPEC will extend its production cuts further when they meet on the 25th of this month
  • Treasury markets slip early on, with the yield on the benchmark 10-year up 2 bps to around 2.37%, while the 30-yr tops 3% again and the shorter term 2-yr up above 1.32%
Sector Movers Today
  • Casino, Lodging & Leisure; gaming stocks weighed down by new ATM rules (Galaxy, Sands China, WYNN, MLCO) as Bloomberg reported Macau’s government is requiring facial recognition and identification card checks at ATMs before Chinese UnionPay cardholders can withdraw cash;MLCO 27.769M share Spot Secondary priced at $21.35
  • Internet; STMP shares slide as PBI announced a new offering for its cloud-based SendPro mailing and shipping solution; JD posted earnings beat on better net revs; TRIP and GRUB announced an agreement integrating Grubhub’s restaurant network into the TripAdvisor desktop website, mobile web and mobile app experiences; AMZN mentioned positively in Barron’s; PETS rises on earnings beat for Q4
  • Consumer Staples; couple of earnings in food space as TSN Q1 EPS just missed estimates on slightly better sales, while SYY Q3 EPS also missed by one penny on better sales and slightly better operating income and LNCE Q1 results slightly missed, but shares fared well; in consumer products,NWL boosted year EPS to reflect 1Q beat, aided by core growth that exceeded all but one of its consumer products competitors
  • Consumer finance/lending; ASPS said it’s aware OCN/NRZ have each stated there are on-going negotiations to reach agreement that would convert certain of NRZ’s existing rights to mortgage servicing rights (MSRs) to fully-owned MSRs/views efforts to reach agreement as positive; would reduce uncertainty and strengthen NRZ, OCN; FDC rises on in-line Q1 EPS and better revs, especially in GBS revs in N.A.; GPN named new best idea at Guggenheim after earnings; TSSupgraded to buy at Goldman Sachs; ONDK Q1 rev guidance misses views after Q1 beat 

Stock GAINERS

  • AXSM +13%; receives FDA fast track designation for AXS 05 for Alzheimer’s
  • CCP +8%; SBRA and CCP to combine in a $7.4B transaction https://goo.gl/EOKYhd
  • FDC +4%; on in-line Q1 EPS and better revs, especially in GBS revs in N.A.
  • GIMO +14%; after Elliott Management said it had built a 15.3% stake in the company
  • KATE +8%; to be bought by COH for $18.50 per share/$2.4B deal https://goo.gl/YHBjwK
  • NWL +13%; boosted year EPS view to reflect 1Q beat, aided by core growth
  • STRP +34%; said a revised offer from a multi-national telecom company of $184/share is superior to a previously announced agreement to be acquired by AT&T (T) https://goo.gl/O9uQ9I
  • TRCO +6%; SBGI confirms deal to acquire for $43.50 per share/$3.9B https://goo.gl/5UOO29
  • VAR +3%; upgraded by two analysts (Citi and BTIG) citing strongest product cycle in years

Stock LAGGARDS

  • HZNP -31%; as Q1 EPS/sales both miss consensus and guided year revs well below consensus
  • KITE -13%; earnings and discloses CAR-T patient death
  • MU -1%; downgraded to neutral at Goldman Sachs on EPS revisions/DRAM concerns
  • STMP -5%; as PBI announced a new competing offer for its cloud-based SendPro mailing
  • TSN -5%; Q1 EPS just missed estimates on slightly better sales
  • TXMD -23%; after disclosing that it received a complete response letter (CRL) from the FDA for TX-004HR, a treatment of moderate-to-severe vaginal pain related to menopause.
  • WYNN -1%; gaming stocks weighed down by new ATM rules

Market commentary provided by Hammerstone Markets, a division The Hammerstone Group, a firm separate from and not affiliated with Regal Securities L.P.  Regal Securities L.P. has not participated in the creation of the content, and does not explicitly or implicitly endorse the conten

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